(rejected) China to Roll Out Digital Yuan Transfers on Smartphones as Part of the Pilot Test of Its DCEP

Chinese citizens are set to benefit from the use of digital yuan as the country will expand trials of its Digital Currency Electronic Payment (DCEP) on December 12 by enabling a feature that allows local consumers to send funds to each other using their smartphones. 

Up to 1,000 residents in Suzhou will participate in a pilot test of the new feature that can be used even without an internet connection. The new test will be conducted together with a digital yuan “lottery” in Suzhou city. The goal of the new trial test is to simulate the experience of exchanging physical cash at hand when digitally transacting with the state-backed digital currency via smartphone. in light of the pilot test, Huawei technologies have launched smartphones that will enable such a new feature.

If the test becomes successful, it will bring the country a step closer to its plan of unveiling a complete launch of its state-backed central bank digital currency (CBDC) by the time the Winter Olympics are conducted in February 2022.

In the Suzhou pilot test program, 100,000 residents will be selected to receive 200 yuan ($31) each. The selected residents will be able to use the digital funds to purchase products at stores within the city. Furthermore, the digital currency is also set to be used on JD.com, China’s largest online retailer, which will become the first online platform to accept the new digital form of money issued by China’s Central Bank.

The test is designed to examine whether JD.com platform can enable digital currency payments under heavy stress without technical glitches. More than two million online retailers will offer massive discounts on December 12, a shopping event popularly recognized as “Double 12”, which normally sees plenty of orders as early as midnight.

The trial pilot programs are also expanding to other cities. For example, in Chengdu, employees working in major banks have invited residents to download a wallet app that can freely convert physical cash into the Chinese digital currency. Citizens can also use the digital yuan at locally based supermarket chains and other stores and use the electronic currency to pay bills on their smartphones.

The Hong Kong Monetary Authority (HKMA) and China’s Central Bank have launched technical pilot tests of cross-border payments using the digital yuan in the Xiong’an New Area, a city in Hebei Province. The city now allows custom authorities to accept security deposits in the state-backed digital currency from importers.

China’s Digital Currency Expanding to Other Regions

In October this year, the People’s Bank of China teamed up with Shenzhen city to distribute coins worth 10 million digital yuan ($1.5 million) to residents. Shenzhen, known for its manufacturing resources and maker community, took the lead in trialing China’s digital yuan. About 50,000 residents received 200 yuan each, usable at stores and restaurants. Suzhou is the next city in the country to test the digital yuan on December 12. The city, which is located in Jiangsu Province of East China, will host a shopping festival, popularly known as “Double 12” and examine the feasibility of the digital yuan following its earlier tests in Shenzhen.  

Xiong’an and Chengdu, along with Olympics venues, are also selected for the first round of pilot trials. China also plans to run trial tests in 28 areas, including Beijing, Shanghai, Chongqing, Guangzhou, and Tianjin, covering the largest cities of the nation.